After a long wait, the Senate has finally passed student loan legislation. It would restore lower interest rates for undergraduates. Many of them saw their rates double on July 1st when the Senate missed its deadline.

As NPR's Ailsa Chang reports, the new measure closely resembles both what the president wanted and what the House has already passed.

AILSA CHANG, BYLINE: This sometimes geeky debate about where to set interest rates for students has really been about larger questions. Should the student loan program be a market-based system, or should it be more like a government subsidy? Should the government be allowed to earn any money from the program, or should it be prepared to take on debt to help more students go to college?

Independent Angus King from Maine says the bipartisan Senate deal splits the difference on all these issues. Like the House plan, it ties the student loan rate to the borrowing rate for the U.S. government. So King says students will snag a rate well below what's available in the outside market.

SENATOR ANGUS KING: If they went to a bank with a loan, with no collateral, no co-signing, no job, the rates would be much higher than what we're talking about here.

CHANG: Under the Senate plan, all undergrads will get a 3.86 percent interest rate this year, but there's a catch. Here's Democrat Dick Durbin of Illinois.

SENATOR DICK DURBIN: Well, I won't mislead you. It's based on a 10-year treasury rate, and we project that over a period of time, as general interest rates go up, so will the student loan interest rate from 3.8 percent, but we put a cap on it.

CHANG: Yeah. Well, student advocates like Chris Lindstrom of U.S. Public Interest Research Group says that cap isn't low enough.

CHRIS LINDSTROM: By 2018, an undergraduate who takes out the maximum in subsidized and unsubsidized Stafford loans will pay 5,462 more dollars over the life of their loans than she would have last year.

CHANG: What almost every lawmaker seemed to harp on until now was a dire need to avoid imposing a 6.8 percent rate for subsidized Stafford loans. But under the Senate plan, all undergraduate loans will see interest rates climb beyond 6.8 percent in just four years, according to Congressional Budget Office estimates. And the bill's critics say this proposal locks in $180 billion in revenue over the next 10 years, which means the government is still making money off students.

To Independent Bernie Sanders of Vermont, the very thought of passing something so close to what House Republicans have already passed should be a hint that something is wrong.

SENATOR BERNIE SANDERS: They say it's a pretty good bill. We'll accept it. Well, if the most right-wing Congress in American history thinks that this is a pretty good bill, I would hope that many Democrats say maybe there is something wrong with this bill. Maybe we can do something better than that.

CHANG: House Republicans expect to quickly take up the Senate bill before classes start this fall. Ailsa Chang, NPR News, the Capitol. Transcript provided by NPR, Copyright NPR.